Fontenot MortgageOdette Fontenot · Mortgage broker
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The loans

The maths

Odette

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Investing

Does the rent cover the payment?

On an investment loan the property qualifies rather than you. The whole question is whether the rent covers the payment by enough — and on a Gulf South rental, the insurance premium usually decides it.

Illustrative only. Every figure is computed in your browser from what you type. Nothing here is a quote, an offer of credit, an APR or a rate lock, and no result is stored or sent anywhere.

The property

A signed lease, or the appraiser’s market rent schedule where there is no lease yet.

7%

Wind and flood may be separate policies. This is the number to establish before anything else.

The loan

25%
7.85%
1.15

Illustrative. Some programmes go below 1.00 with a pricing penalty; others want 1.25.

Coverage ratio

0.00

Loan amount
$0
Principal & interest
$0
Full monthly payment
$0
Rent after vacancy
$0

Does it clear?

Where the ratio breaks

Ratio at that insurance premiumProgramme minimum

Fixing a short ratio

Options for raising the coverage ratio
ChangeNew ratioWhat it costs

The assumptions, stated.

  • Coverage is measured against the full payment including taxes, insurance and dues, which is the common definition but not the only one — some programmes use principal and interest alone, which flatters the ratio.
  • Short-term-rental income is treated very differently lender to lender and is not modelled here. In New Orleans, licensing rules matter and change.
  • Management fees, turnover costs and repairs are not deducted. Your actual return is lower than the ratio suggests; the ratio is an underwriting test, not a yield.
  • No personal income, employment or debt-to-income figure enters this calculation at all. That is the point of the product.

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—The other seven

The next step

Numbers are a start. A file is a conversation.

If the calculator says something you did not expect, that is usually worth ten minutes on the phone rather than another hour of typing.

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